Chanel S.A.
Sector: Luxury
Countries of operation: Brazil, China, France, Germany, Hong Kong, Italy, Japan, Kuwait, Saudi Arabia, the UAE, the UK, the US and approximately 40 other countries
Key product categories: Apparel, accessories, cosmetics, jewelry, leather goods, perfumes and watches
Company owner: Litor Limited (Chanel S.A. is a subsidiary of Chanel Limited, which is owned by Litor)
Annual Metrics
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Fiscal year ends on December 31[/caption]
Summary
Chanel was founded in 1910 by Gabrielle Chanel and is headquartered in Neuilly sur Seine, France. It is a privately held company that develops, manufactures and sells luxury products worldwide. Chanel offers a broad range of items, including accessories, eyewear, jewelry, leather goods, makeup, perfumes, ready-to-wear and watches.
Chanel is a heritage brand, known for its high-fashion collections, which are presented twice each year in Paris. It is also known for its Métiers d’Art—the numerous specialized suppliers the company has acquired over the years. Its products are closely guarded and it only sells some its items via e-commerce: Consumers can buy Chanel eyewear, fragrances, makeup and skincare online—and some fine jewelry and watches are available online to collect in store—but its haute couture and fashion products are only available in Chanel boutiques, including clothing and handbags.
Company Analysis
Coresight Research insight: Chanel has maintained a unique, exclusive and timeless image, reflecting its roots in terms of its branding and minimalist designs. Its interlocked CC logo was designed in 1925 and has remained the same since, outlasting several of its peers’ brand transformations. The company has also made several investments in specialist suppliers to secure the exclusivity of its supply chain.
Chanel is a strong advocate of sustainable business practices and has implemented science-based sustainability targets for many aspects of its operations. It has also backed a number of startups that develop cosmetics and personal care products sustainably, including Finnish company Sulapac and Boston-based Evolved by Nature—aiming to stay at the forefront of sustainability and innovation.
The company is following in the steps of Hermès in limiting the sale of some of its handbags to one bag per person per year in South Korea (whether it will roll out globally is unconfirmed), as a measure against price inflation in the resale market. While this may limit the availability of Chanel bags for resale, it also prevents the company from taking control of the resale market in its nascent stages—as Kering has done, establishing a dedicated site for consumers to trade Alexander McQueen products.
Chanel’s financial performance in 2020 reflects the brand’s resilience—its revenues declined by 17.6% as it faced substantial challenges with its boutiques were closed for a large part of the year and limited online sales. Several competitors experienced similar declines, despite selling online extensively. Looking ahead, we believe that Chanel is poised for a rebound in 2021 and that it will continue to be a market leader, due to its strong engagement with sustainability and its focused strategy that concentrates on remaining true to its roots.
| Tailwinds |
Headwinds |
- Reopening of tourism and travel
- Increasingly young and high-earning consumers in strong growth markets, such as China
|
- Underexposure to high-growth e-commerce
- Increased competition from new brands and established luxury conglomerates
- Threat of counterfeit products to the brand
|
Revenue Breakdown (FY20)
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Source: Company reports[/caption]
Company Developments
| Date |
Development |
| December 14, 2021 |
Chanel appoints Leena Nair as its global CEO, effective January 2022. Nair is currently the Chief HR Officer at Unilever and will succeed Alain Wertheimer. Wertheimer will remain in his role as the Chairman of the Board. |
| November 6, 2021 |
Chanel celebrates the 100th anniversary of its No.5 fragrance with a No.5-themed party at the Rockefeller Center in New York City. |
| September 28, 2021 |
Chanel announces that Finnish startup Sulapac has developed a cap for its perfume bottles made of sustainable materials. Chanel invested in Sulapac in 2018. |
| August 25, 2021 |
Chanel acquires an unknown minority stake in knitwear business Paima. |
| July 20, 2021 |
Chanel opens its first boutique in Washington DC. The 8,000-square-foot boutique offers beauty, fashion, fragrances, jewelry and handbags. |
| October 9, 2020 |
Chanel acquires a 60% stake in shoe manufacturer Nillab Manifatture Italiane and furniture maker Cellini 04. |
Management Team
- Alain Wertheimer—Chairman of the Board
- John Galantic—President of US and COO
- Philippe Blondiaux—Global CFO
Source: Company reports/S&P Capital IQ
